Senate Back in Session Today; Holiday Cheer for Retailers; Critical Day in the Middle East

Aired November 26, 2012 - 05:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN BERMAN, CNN ANCHOR: You weren't the only one headed back to work this morning. Congress is back in session, and just in time, we are now 35 days away from the fiscal cliff.

ZORAIDA SAMBOLIN, CNN ANCHOR: A big day in the Middle East. Today, both Israel and Gaza meet to further the cease-fire between the two embattled nations. We're going to have a live report coming up for you.

BERMAN: Gray Thursday, Black Friday, and now, Cyber Monday. But just how good are the deals today, compared to what was put out this past holiday weekend? We're going to break it all down for you.

SAMBOLIN: Did you do any shopping?

BERMAN: Absolutely not. There's too much football.

SAMBOLIN: Don't you love it? You're an 11th hour shopper.

BERMAN: Good morning. Welcome to EARLY START, everyone. I'm John Berman.

SAMBOLIN: And I'm Zoraida Sambolin. It's 5:00 a.m. in the East. So let's get started.

They are back. Our lame duck Congress returning to Capitol Hill today. The Senate in session this afternoon. The House back tomorrow.

And with 35 days left, as John just reminded us, before we plunge down the fiscal cliff, two prominent Republican senators, Lindsey Graham and Saxby Chambliss are signaling they are willing to give a break the no tax pledge. That is a hopeful sign, folks, because a new CNN/ORC poll shows more than two thirds of Americans believe a trip over that cliff would create major problems, perhaps even a crisis.

CNN political editor Paul Steinhauser is live from Washington, D.C. this morning.

Nice to see you, Paul.

So the fiscal cliff triggers back-breaking tax hikes and massive spending cuts. You've got more numbers that show what type of budget plan Americans actually prefer. PAUL STEINHAUSER, CNN POLITICAL EDITOR: Exactly. And one of the big arguments, Zoraida, is should it be all spending cuts to get us there or tax increases, as well? We'll take a look at brand-new numbers just out from CNN/ORC. You can only about one in three say whatever deal should be struck should be just spending cuts. But almost seven in 10, two thirds of Americans say the plan should include spending cuts and tax increases.

Zoraida, our poll indicates Americans are not so optimistic a deal will get done and if it doesn't get done, who gets the blame? Well, look at this right here, about 45 percent say Republicans in Congress will be blamed if there is no deal and the country falls off the fiscal cliff, about a third say the President should get the blame, and about 15 percent say you know what? Both sides get the blame -- Zoraida.

SAMBOLIN: Let's focus on those Republicans. A lot are saying they will violate Grover Norquist's no tax pledge. Tell us a little bit about that.

STEINHAUSER: Yes, this pledge goes back to 1986 and you're now seeing some Republicans saying, no, I'm going to break this pledge. Lindsey Graham, as you mentioned, from South Carolina, the most recent, Saxby Chambliss did it the other day as well. Interesting, both of those Republicans senators up for re-election in 2014, maybe they'll face a challenge from the right.

Take a listen to what Lindsey Graham said on the Sunday talk shows.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM, (R) SOUTH CAROLINA: When you're $16 trillion in debt, the only pledge we should be making to each other is to avoid the coming grief, and Republicans -- Republicans should put revenue on the table. We're this far in debt, we don't generate enough revenue.

(END VIDEO CLIP)

STEINHAUSER: And that's his key difference here. He says he's OK with the no taxes but we do need to raise revenues and if that means cutting back on such things as tax rates, he will do it. Also, he says the Democrats have to come forward here, as well. They have to do entitlements if he's going to break his pledge -- Zoraida.

SAMBOLIN: All right. Paul Steinhauser live in Washington for us -- thank you.

BERMAN: So, we're in the midst of the shopping frenzy and some people are seeing encouraging starts to the holiday shopping season. A record 247 million shoppers --

SAMBOLIN: Wow.

BERMAN: -- hit the stores and Web sites over the weekend. The National Retail Federation said they also shelled out more cash compared to last year. SAMBOLIN: But the question: will shoppers still be in a spending mood today? Because, you know, today is Cyber Monday.

Christine Romans is here with more.

Some early holiday cheer for retailers, too.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: For retailers, yes. Unless very smart, savvy targeted shoppers took the deep discounts from the weekend and now, they're done for the rest of the year, right? And then the retailers would not be so happy.

Also, you're seeing this trend cannibalizing, right? You had more sales on Thursday that height have taken a little bit of the euphoria out of Black Friday. And so, now, you're stretching basically the same amount or a little bit more spending over four days instead of the traditional three days.

And also remember, $59.1 billion, record number of spending, that's up 13 percent from last year. This is according to the industry, the National Retail Federation. But last year, sales were up 15 percent. So that shows you it's not the barn-burner that it necessarily was last year.

So who is going out and what in the world are they buying? Well, this year, they spent about $423 on average, according to the industry.

And this is what they were spending it on: clothing and accessories, about 50 percent. Toys, books, C.D.s, DVDs, video games, that was 39.8 percent. Electronics making up about 37 percent of the purchases. No surprise there, electronics are really the hot gift item.

Fifteen percent on jewelry, this is, of course, only the second-worst time of the year to buy jewelry, now and Valentine's Day, bah, humbug. And gift cards, 32.6 percent, I have no idea why people are buying gift cards tied to the holiday since they are the same amount on the gift card until the end of the year.

However, this is what you are seeing overall in terms of traffic, traffic up some 35 million people on Thursday. So you had sales down a little bit on Friday. And then the online sales spiked for the first time ever, you topped $1 billion in online sales on Friday, and you had online sales of $633 million on Thursday.

Today is the made-up holiday called Cyber Monday, made up by the industry to convince you to spend more money if you didn't already spend money over the weekend. That made up holiday will know a little bit later on what kind of sales are there.

But I'm going to say consumers are very smart. They don't wait for a calendar day to look online. A lot of you today will be getting a ton, a ton of -- you're going to get a ton of --

BERMAN: Solicitation.

ROMANS: Solicitations, right, in your e-mail. So be prepared for that today.

But remember, a lot of people are doing what's called self gifts. Eight in 10 bought something that wasn't a gift for someone else over the weekend.

So, if you're smart in getting a good deal, go for it. If you're just getting into an impulse buy be very, very careful.

BERMAN: In defense of Romans here, you are correctly skeptical -- correctly skeptical this year. They have a huge interest in putting out these numbers, making them see good.

When will we know for real whether this was a good holiday shopping season?

ROMANS: We should know in a few weeks if this was a really good holiday. We'll know when the quarter is over and if they can sustain these kind of sales for the quarter. But remember, it's called Black Friday because this is the time of the year that retailers knew they'd make money for the year, if they had a good day. They went in the black on Friday.

SAMBOLIN: And they do comparison shopping ahead of time and they know they're getting a good deal.

ROMANS: And remember, Deal News says 70 percent of the in-store sale prices are available online. So remember that.

SAMBOLIN: So there you have it. You don't even have to leave home. I love that.

Thank you so much, Christine. We appreciate it.

ROMANS: You're welcome.

SAMBOLIN: Seven minutes past the hour. New overnight, Israeli Defense Minister Ehud Barak is resigning his post. He says he is quitting politics. He says it's to spend more time with his family. He will leave his post in January.

Ehud Barak's resignation comes less than two weeks after Israel launched an all-out strike on Hamas military positions in the Gaza Strip, saying it could no longer tolerate the constant rocket attacks by Hamas on his Israeli territory.

BERMAN: The filmmaker behind "Innocence of Muslims", that's the crude anti-Muslim short film that ignited protests in the Islamic world, says he has no regrets about making the film. In written responses relayed to his attorney, Nakoula Basseley Nakoula also told "The New York Times" he had no regrets about how he treated the cast, saying they signed contracts that did not prevent changes in the script.

In addition, the deadly protests the film also lead to Nakoula's arrest for violating supervised release on a fraud conviction. He is currently serving time in jail in Los Angeles.

SAMBOLIN: Human error is to blame for last week's gas explosion at a strip club in Springfield, Massachusetts. At least 21 people were injured by that blast, including 12 firefighters, and two police officers, as well. Officials say a utility worker inadvertently punctured a hole in a high pressure gas line while responding to calls about a gas odor.

BERMAN: There were no grand prize winners for Saturday night's $325 million Powerball jackpot drawing. What does that mean? It means that Wednesday night's drawing brings a record $425 million.

And that number could go even higher depending on ticket sales before Wednesday's drawing. The previous high for Powerball was $365 million. That was 2006. So this is a record.

What are you going to do with that money?

SAMBOLIN: We're going to pool al our money together.

BERMAN: I don't trust anyone in a pool. I will never enter a lottery.

SAMBOLIN: Really?

BERMAN: It always ends badly. It always -- there are lawyers --

SAMBOLIN: When we win, we'll see how you feel about that.

BERMAN: There are lawyers whose practice is devoted to lottery disputes. That's how often it ends badly.

SAMBOLIN: I'm going to take my chances, Berman, just in case.

BERMAN: I don't trust you.

SAMBOLIN: Nine minutes past the hour.

A major prescription drug is under recall this morning. Apparently, glass was found in some of the bottles. Seriously. Find out which one after this quick break.

We'll be right back.

(COMMERCIAL BREAK)

BERMAN: Welcome back to EARLY START, everyone.

Today, a very important day in the Middle East, particularly in Egypt. Delegations from both Israel and Hamas are in Cairo to meet separately with representatives from Egypt to advance the cease-fire talks. And, as we mentioned, this is all happening as Israel's Defense Minister Ehud Barak announced he is resigning his post. That's just happening.

Meanwhile, Egypt internally embroiled by President Mohamed Morsi's move late last week granting himself really extraordinary powers. Critics have called it an un-democratic power grab. Today, Morsi meets with Egypt's highest judicial body which has denounced his action.

We're going to go now to Matthew Chance who is in London.

Good morning, Matthew.

I want to start with the news that really just happened. Israel's Defense Minister Ehud Barak finishing up a press conference, announcing that he is resigning come January. Any sense of why this move is happening, and what next for Ehud Barak? He's really been a central key figure in Israel for decades.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, he certainly has. I don't think there's a great deal of surprise in this announcement -- certainly within Israel and the political circles that I've been speaking to, at least. It's something that Mr. Barak said that he wanted to do for some time, but the recent operation by Israeli forces in Gaza delayed his announcement to do that. Something he says he's been planning to do for a long time.

Remember, this is a figure, as you mention, who's been in public office and public service for his entire career. He was in the military in Israel for the best part of 40 years. He went on to serve as prime minister, foreign minister, and defense minister most recently as well. And what he says now that he wants to do is simply to, you know, retire from politics. He's reached retirement age, more or less, and he wants to spend more time with his family.

I think feeding into that, as well, there have been some recent opinion polls in Israel, the party which he leads, the Independence Party in Israel, has been slighted in opinion polls as well. There was a sense in the upcoming elections in the country, his party would not have gained any or not very many seats at all. And so, he was on the brink, if you will, of some kind of political obscurity. And so, he's taken this decision more or less to preempt that, John.

BERMAN: He's flipped from Labor a few years ago.

Matthew, any sense that his departure will play a role in these peace talks happening in Cairo? And what is the status of those talks?

CHANCE: Yes, I'm not sure that his resignation is going to have a direct impact, although obviously it's a changing personality in this fast-transforming region. And the talks in Cairo between -- separately between Hamas and the Egyptian government and Israel and the Egyptian government, to try and sort of hammer out the details on the cease-fire that was implemented last week.

On the one hand, you've got the Hamas from Gaza who want the border crossings to remain open, they want the crossings into Israel to be opened, as well, so they can essentially have that economic blockade on Gaza that's been imposed by Israel eased to a very large extent. The Israelis, on the other hand, want guarantees that weapons aren't going to flow into Gaza once the crossing points are opened, certainly the ones from Egypt.

And so, this is just the start of a process of negotiations, which I'd be very surprised if it would produce any agreements today, perhaps not for several weeks. But we'll be watching them closely, John.

BERMAN: And meanwhile this is happening in Cairo, in Egypt, which is embroiled in this new controversy, because the president there, Mohamed Morsi, has granted himself these extraordinary powers. Matthew, if you could explain exactly what these powers are and then explain what's gone on here. I mean, the stock market there tanked, there's a frenzy of people demonstrating on the streets and now signs he may be backing off.

What exactly is this all about?

CHANCE: Well, it's Mohamed Morsi, the president of Egypt, announcing what he calls constitutional declaration. It's basically a decree which says that no authority in Egypt can revoke the decision of the president, which his critics say give him the powers like a modern-day pharaoh, basically whatever he says goes. He's also deprived the judiciary of the ability to dissolve the country's assembly, the country's parliament and -- which is at the moment drafting a constitution, a new constitution for the country.

He says these are just temporary measures, that they're not intended to be permanent, really to protect the -- the ideals of the revolution over through Hosni Mubarak, what was a 20 months or so ago now. There's a lot of concern in Egypt that this is a power grab intended to bolster the Islamists, remember, Mohamed Morsi is the head of the Muslim Brotherhood as well.

And so, you're seeing, as you mentioned, thousands of people coming out on the streets, calling for the decree to be revoked and calling as well for Mohamed Morsi to step down.

Take a listen to what some of them had to say.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I still would want these decrees to be withdrawn. And secondly, I would hope that he starts to listen to the people.

UNIDENTIFIED FEMALE: I am willing to tell him we'll oust him, like -- just like we did with Mubarak, I am going to oust him. And he's bringing it down upon himself.

(END VIDEO CLIP)

CHANCE: So a big gamble there for Mohamed Morsi. And it's a gamble that obviously has divided opinions inside Egypt, John.

BERMAN: All right. Matthew Chance in London, great to see you this morning. Thanks very much.

SAMBOLIN: It is 17 minutes past the hour. Let's get you up to date, here's Christine Romans.

ROMANS: Good morning again you two.

A fire that broke out in a garment factory in Dhaka, Bangladesh, this morning is now under control. It happened just two days after another fire there killed at least 120 workers. Authorities still don't know what caused the eight story blaze Saturday night. The factory is owned by Tazreen Fashion Limited, which manufactures products for Wal- Mart and other companies in the U.S. and Europe.

Same sex marriage is a topic this week at the Supreme Court. Justices will decide whether to hear an appeal that support's California's controversial Proposition 8, which defined marriage as between a man and a woman. Even though voters approved it, federal courts have struck down Prop 8, calling it discriminatory.

Forty-one batches of a popular cholesterol-reducing medication are being recalled because they may contain small particles of glass. Manufacturer Ranbaxy says the recall affects bottles containing 10, 20 and 40 milligram tablets of Atorvastatin, that's a calcium. That's the generic version of the widely prescribed anti cholesterol drug, Lipitor. Check your medicine cabinet.

So much for the November swoon, the defending champion, the New York Giants, is routing the Green Bay Packers in Sunday night football. Eli Manning throwing three touchdown passes in 38-10 victory. The Giants snapping the two-game losing streak, knocking the Packers out of a first place tie with Chicago in the NFC north.

Take a look at this -- a third quarter shower delaying the Seahawks- Dolphins game in Miami yesterday. It seems the stadium sprinkler system malfunctioned. It's thought it was Saturday. The players toweled off. The game resumed. The Dolphins went on to beat the Seahawks 24-21.

We are minding your business this morning. Well, Christine Romans is here. She's minding your business this morning.

A look ahead?

ROMANS: Yes, with futures down this morning, but it was a very good day on Friday for stocks. And last week turned out to be a decent week for stocks overall. There's the Friday markets close, more than a percentage point increase for each of the major indices. And you have the Dow back above 13,000 for the first time since the election.

So, a bit of a recovery last week. And one of the reasons is, this feeling that they're talking about the fiscal cliff, that's something that can be resolved and it puts the focus again back on what's happening in the U.S. economy.

What's happening in the U.S. economy? It slowly is healing job market is starting to filter into sentiment. And the housing market is showing some notable signs of improvement.

This week, we're going to hear more on the housing market. Manufacturing sector, also some consumer data. We're going to get some fed regional reports from the Federal Reserve.

We're also going to get a gauge of GDP, gross domestic product. You hear me banging on about this all the time, GDP is the broadest gauge of economic growth. Prior quarter was something like 2 percent, not great. We think that maybe they're going to think this quarter was more like 2.8 percent, which would show, again, that healing in the market overall.

A quick focus for you on the housing market. This is something you probably felt most directly, in part because we have record low mortgage rates. Guys, last week, the 30-year fixed fell to 3.31 percent. The 15-year fixed, this is the popular refinancing tool, 2.63 percent.

Many of you are telling me you can't qualify. I'm telling you, these rates are going to stay low for a long time so you should try to repair your credit history so that you can take advantage of them.

The quickest way to repair your credit history, if that's the thing that's holding you back in a slow recovery, pay your bills on time, every time.

Attention holiday shoppers: pay your bills on time, every time. That is the quickest way to begin to raise your credit score. So you can take advantage of the recovery in the housing market.

So futures lower right now. But the attention right now in the stock market and the U.S. economy is going to turn to the fundamentals of the economy. We're going to get a lot of reads about that this week.

SAMBOLIN: All right. Thanks, Christine.

BERMAN: Attention holiday shoppers. She's kind of on fire this morning. I like it, Christine Romans.

ROMANS: This is my annual ritual.

SAMBOLIN: Don't spend money. All right, thank you.

It is 25 minutes past the hour. Imagine that a city shredded a bunch of paper with Social Security numbers printed on them, and then imagine that they used that shredded paper as confetti during a huge Thanksgiving Day parade. Guess what? It happened. The details, straight ahead.

(COMMERCIAL BREAK)

SAMBOLIN: OK, folks. Today, we are just 35 days away from the fiscal cliff. What it means for your money and the country's money, straight ahead.

BERMAN: So, confetti filled with Social Security numbers. That's what dropped from the sky during a major Thanksgiving Day parade. This really happened. Find out where, straight ahead.

SAMBOLIN: All right. Remember this picture of a woman caught riding on the back of a manatee? We have now learned that she has been arrested.

BERMAN: Bad idea.

SAMBOLIN: Yes, very, very bad idea apparently.

Welcome back to EARLY START. We're happy you're with us this morning. I'm Zoraida Sambolin.